Despite the automobile industry witnessed sluggish sales numbers in the last few quarters, the used or pre-owned car segment is growing fast, and is likely to accelerate in future.
The used car market, although having been around for some years, has gained traction of late with more players increasing focus on it. With poor sales numbers dogging the industry, the used cars have come to provide succour to several manufacturers and the larger ones have enhanced the services and offerings to capitalise on this segment.
Many manufacturers already have flourishing businesses under their own brands — Maruti Suzuki’s True Value, Mahindra’s First Choice, Tata Motors’ Assured and Hyundai’s HPromise are very large. In the recent past, big German giants Audi, BMW and Mercedes-Benz also have increased the focus on this segment.
“The average ownership of vehicles is now around four years. While the new car market size is 2.5 million, the used car market is about 3 million today,’’ Vinay Sanghi, CEO, CarTrade.com, an auto classifieds portal, told this correspondent.
At the launch of Mercedes-Benz India’s pre-owned car business brand recently, company Managing Director and CEO Eberhard Kern said it had grown 39 per cent in the January-September, 2014, period, and sold more than 1,700 units in 2014. “For every 100 new cars sold in India, 110 pre-owned cars are sold. In the U.S., it is four times while in Germany it is 2.2 times,’’ he said.
The domestic used car market is growing at 15 per cent and Mr. Sanghi expected it to double in the next four years. “India has 15,000 used car dealers, of which less than 1,000 are organised. Globally, it is largely unorganised. As with the luxury car segment, which accounts for only around 3 per cent of total car sales, used luxury car sales account for a fraction of the total with entry level cars dominating.”